Futures Point To A Stronger Open
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS
+4 The bond market finally caught some bids in the action Wednesday,
probably because the deflationary readings thrown off by the PPI report.
While it is debatable that a 0.3 decline (in the excluding food and
energy breakdown of the PPI) is clearly deflationary, one can hardly
suggest that the readings were in any way “inflationary”.
Later in the action Wednesday, a
New York
state manufacturing
survey came out much stronger than the prior month and that could make
the focus on the Philly survey even more critical today.
STOCK
INDICES
OVERNIGHT
CHANGE to
5:20
AM
:S&P-10
NIKKIEÂ -2.5 FTSE +7.4Â The
stock market will be directly impacted by a flurry of earnings reports
this morning, with several some Dow stocks reporting before the bell and
some after the bell. Considering the failure yesterday, we would assume
that some disappointment off the deflationary tilt Wednesday has been
factored into prices. Energy prices remain firm, reaching two-year highs
overnight.
FOREIGN
EXCHANGE
DOLLAR:
The best the Dollar can hope for is that economic conditions don’t
really sour and result in another aggressive dump in the currency. It
would seem that some of the pressure has been taken off the Dollar this
morning by intervention threats from
Japan
.
With a flurry of critical
US
corporate earnings reports due out today, the
US
will have a chance to throw off some of the disappointment in its
recovery pace. However, even when the
US
displays impressive numbers, the downtrend isn’t soundly defeated.
Therefore, continue to sell rallies in the Dollar, until the point at
which the war in
Iraq
is avoided or war with
Iraq
reaches a stage where victory is assured. In other words, the economy
might mean little to the Dollar and the war with
Iraq
means everything. In the mean time, soaring energy prices look to keep
confidence in the
US
at an extremely low level.
EURO:
The biggest threat against the upside in the Euro is the overbought
status and several days without fresh war mongering dialogue. In other
words, the biggest risk to the Euro longs might be sideways action. The
EU did suggest that the rise in the Euro has hurt competitiveness by 7%
over the last year but that hardly means that the ECB is anywhere near
intervention. We also think that German GDP readings this morning dampen
temporarily the upside momentum in the Euro. Resistance is contract
highs at 105.72 and support comes in at 104.96.
YEN:
The Yen has broken a chain of upside moves with the action this morning.
However, little would seem to have changed current relationships unless
US corporate earnings alter the landscape. Near term support comes in at
84.72.
SWISS:
The Swiss chart shows a significant loss of upside momentum and a
vulnerable posture. We also have to think that financial market anxiety
is lacking but with energy prices reaching a two-year high overnight,
the Swiss should remain well supported.Â
Near term support in the Swiss comes in at 71.78.
POUND:
It is impressive that the Pound managed to reject the lower probe
Wednesday. The Pound should amble along with a sideways consolidation
and respect of support at 159.00.
CANADIAN:
Since the
US
economy doesn’t appear to be on the verge of a quick slide into
deflationary conditions, the Canadian is allowed to benefit from its
economic standing and the lack of competitive strength in other G7
countries. Near term support in the Canadian comes in at 64.78. In other
words, general status quo conditions favor the Canadian.
METALS
OVERNIGHT
CHANGE to
5:20
AM
:GLD-0.30
,SLV+0.0Â ,PLAT+0.40 Â
London
Gold Fix $350.85 -$2.05 LME Copper Warehouse stks
857,275 ton -1,750 tons Comex Gold stocks
2.038 ml -4,338 oz COMEX Silver stks 107.0
ml oz +582,449 oz OVERNIGHT: A lack of direction seen in
Asia
but the bull bias remains in plac
GOLD:
With the Dollar weak this morning there might not be as much impetus to
pressure gold prices today. However, there will be another round of
inflation information today and that could prove to be a burden to gold.
The combination of sluggish economic numbers and negative inflation
readings keeps deflation in play as a limiting force in gold.
SILVER:
While silver did manage to repel against the liquidation press, the
market would still seem to be vulnerable to more selling. We doubt that
CPI will show as weak of a reading as did the PPI, but the deflation
threat is certainly present. However, silver probably saw support off
the
New
York
State
manufacturing reading and could see the same type of impact off the
Philly survey due out this morning.
PLATINUM:
A minor failure on the charts leaves platinum in a vulnerable position.
However, we doubt that platinum will see a direct negative influence
from the deflation question. We think the deteriorating view toward the
US
economic recovery is behind the five-day weakness in platinum.
Therefore, platinum could see its fortune change if the Philly survey is
strong.Â
COPPER:
The gains in copper continue to surprise the trade but some suggest that
the strong
New
York
state manufacturing survey points to a better economy than the market is
giving credit for. However, the Chinese copper market was lower
overnight, as profit takers were out in force. We would suggest that
aggressive traders be sellers of copper but one hint that Saddam might
seek asylum and copper would quickly explode to 82 cents.
CRUDE
COMPLEX
OVERNIGHT
CHG to Â
5:20 AM
 Â
:CRUDE +26Â
,HEAT+19Â ,UNGA+2
 The trade suggests that inventory readings sparked the rally
Wednesday, but we have to think that most of the gains were in process
prior to the API and DOE inventory readings. In fact, the gains started
mostly off early reports that
North Sea
operations were being
dramatically reduced by very high winds.
NATURAL
GAS
The
cold is in play and the talk is that we are headed into a normal winter,
which means that the EIA forecasts of increased natural gas demand are
credible. Furthermore, we continue to maintain a deficit with last year
and have the constant support of fireworks in the regular energy
complex.